PRECIOUS-Gold flat ahead of Fed outcome, lower oil prices lift risky bets

* Palladium set for a fourth straight drop
* Markets await BoJ meeting on Thursday
* Gold to remain neutral between $1,488-$1,523.61/oz -
technicals

(Adds comments, details and updates prices)
By Karthika Suresh Namboothiri
Sept 18 (Reuters) - Gold prices were little changed on
Wednesday amid cautious mood as investors awaited cues on the
U.S. central bank's stance on monetary easing, while a drop in
crude prices dented demand for safe-haven bullion.
Saudi Arabia sought to reassure markets after the attack on
Saturday halved its oil output, saying that full production
would be restored by month's end. O/R
A risk-on sentiment in the market affects demand for
bullion, often seen as an alternative investment during times of
political and financial uncertainty.
Spot gold XAU= was barely changed at $1,502.70 per ounce,
as of 0425 GMT. U.S. gold futures GCcv1 were trading 0.2%
lower at $1,510.70 per ounce.
"If oil prices remain high, there would be inflation risks.
Now oil prices have come off because they (Saudi Arabia) said
they could restore production. Therefore, there is not such a
inflation risk as before," said Helen Lau, analyst, Argonaut
Securities.
However, investors are concerned this news could dissuade
the U.S. Federal Reserve from further cutting interest rates, a
negative for non-interest-yielding gold, she added.
Gold is considered a hedge against inflation.
Economists and analysts widely expect the Fed to cut its
benchmark rate for a second time this year to counter risks
posed by the U.S.-China trade war.
The chaotic moves in money markets and late-day swings in
U.S. federal funds futures mean the CME's FEDWATCH tool shows
about a 62% chance that the Fed will cut rates by 25 basis
points on Wednesday.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was up 0.13%, while the dollar .DXY against a
basket of other currencies was little changed at 98.28.
MKTS/GLOB USD/
"The U.S. administration continues to have a problem, they
want Iran to take responsibility. That is why gold prices are
holding up quite well, " Lau added.
Spot gold remains neutral in a range of $1,488-$1,523.61 per
ounce, and an escape could suggest a direction, according to
Reuters technical analyst Wang Tao. Also in focus is the Bank of Japan's policy meeting due
Thursday, where the central bank is expected to ease its policy
this year. Among other precious metals, platinum XPT= dropped 0.6% to
$937.62 per ounce, while silver XAG= eased 0.4% to $17.95 an
ounce.
Palladium XPD= dipped 0.4% to $1,590.65, on track for a
fourth straight session of decline.